Complete 2012 forensic audit documents - Kansas Bioscience ...

Multiple policies address these items. BKD considers these to be, collectively, “Contract
Procedures.” BKD’s review of Contract Procedures related to KBA policies addressed the
following:
• Purchasing Policy & Procedure
o Purchasing and Signing Authority
o Vendor/Consulting Contract Management Policy and Procedure
• Accounts Payable
o Accounts Payable
KBA has authored its own policies and procedures, which have changed over time. See
Exhibit 53 - Contract Exhibit 2 for a chart of the applicable procedures for our contract review,
and how these changed over time.
During our review of vendor contracts and related expenses, we found the following exceptions:
• contracts that could not be located;
• unexecuted contracts;
• signature dates after the effective date of the contract;
• Thornton’s electronic signature used on contracts;
• missing documents in corporate contract files;
• payments without indication of the proper approval; and
• inconsistent general ledger classification of expenses.
Contract Policy
Exhibit 53 - Contract Exhibit 2 details how the Purchasing Policy changed over time for the
contract requirements. Presently, KBA’s Contract Procedures states that the executive staff are
responsible for reviewing, approving and monitoring all contracts for KBA. The guidelines
indicate that all vendor/consulting contracts will be prepared and/or reviewed by the contract
administrator and approved by the executive staff. The financial executive assistant is
responsible for the storage, archiving, destruction of the original documents and maintaining a
renewal tracking file of contract termination dates in order to review documents prior to their
renewal or termination.
The Contract Policy gives a minimum threshold of $1,000 for requiring a vendor/consulting
contract for goods or services. The policy suggests that where possible, contracts should be
submitted 30 days in advance of the effective date. When not possible, the submitter should
identify a requirement date for return of the contract.
The contract administrator issues two sets of final contract documents. The executed copy is
scanned and put on the network, and the paper copy is filed in the corporate files. The corporate
files should also include subsidiary documents such as confidentiality agreements, nondisclosure
agreements, conflict of interest statements, schedules, exhibits, addenda and amendments.
On a quarterly basis, the financial executive assistant is to provide the CFO/COO with a list of
all agreements which will be renewed in the following three months, and indicate which of the
contracts require action to extend. The CFO/COO is to forward the list to the CEO for renewal
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